MICHEL PIREU: Debunking the small caps growth myth

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South Africa Headlines News

It is not true that investing in smaller companies is a surefooted way to success, as more than 90% of them remain small

Confirmation bias is the propensity to seek out or interpret information that validates our beliefs. An investor who likes the idea of buying into small caps, for example, is more likely to look for information that justifies doing so and reject information to the contrary.

Inversion can be particularly useful as a way to counteract the gravitational pull of confirmation bias. The root of inversion is “inverting,” meaning to upend or turn upside down; to take the opposing view.A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, Morningstar financial data, and digital access to the Sunday Times and Times Select.

 

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